Advances in Social Science, Education and Humanities Research, volume 642

Proceedings of the Second International Conference on Public Policy, Social Computing and Development (ICOPOSDEV 2021)

A Study of the Use of Cashless Payments in Relation to

Income, Financial Behavior, and Almsgiving Behavior
in Sumatera, Indonesia
Khaira Amalia Fachrudin1,* Amlys Syahputra Silalahi2
1,2
Faculty of Economics and Business, Universitas Sumatera Utara
Email: khaira@usu.ac.id

ABSTRACT
In 2014, Bank Indonesia established the National Non-Cash Movement. Cashless payments are made digitally for
changing financial transactions among people. This study aims to investigate whether gender, income, herding behavior
in shopping, debt behavior, and almsgiving behavior affect the opportunities for using cashless payments in Sumatra,
Indonesia. The sample consists of 500 people who come from five major cities in Sumatra, including Medan, Batam,
Palembang, Padang, and Lampung. Logistic regression was used as the analytical tool. The results of the present study
revealed that at alpha five percent, income and herding behavior in shopping had an effect on the use of cashless
payments. The implication is that the use of cashless payments can be promoted through increasing the community
income so that it can increase economic growth and efficiency at the same time. However, herding behaviour should
not be excessively exercised despite it can increase the use of non-cash transactions.

Keywords: Almsgiving behavior, cashless payments, financial behavior, herding behavior, income

1. INTRODUCTION Cashless payments are dominantly done by people

with higher education backgrounds and higher material
Technological developments cause changes in all status [2].
aspects of human life, including the payment system.
Cash-based payment method has transformed into cash- The pandemic has caused landslide changes in
based payment method has transformed into non-cash consumer behavior and habits. Prior to pandemic, the
payment. The digitalization of the payment method will people in Poland were not interested in opting for
be regarded as a watershed moment in the future cashless payments, but their perception of the risks posed
economy's cashless era [1]. Bank Indonesia also by Covid-19 has led to an increase in the use of cashless
promoted the Non-Cash Movement (GNNT) campaign payments [3]. A number of previous research have
on August 14, 2014. largely examined performance, convenience in cashless
payment, and lifestyle. For example, [4] found that
Electronic transactions in Indonesia have seen a rapid performance expectancy, perceived technology security,
growth from 2015 to 2020 as illustrated in Table 1. For condition, hedonic motivation, innovativeness, and social
the year 2021, up to July, the amount reached influence are positively related to the adoption of
Rp. 157,415,340.67. cashless payments. [5] discovered that the ease of use,
Table 1. Electronic Transactions in Indonesia innovativeness, usefulness, optimism and lack of
Periods Amount (IDR 000,000) awareness have a direct effect on users' readiness to use
Year 2015 5,283,017.65 non-cash transactions. The research conducted by [6] in
Year 2016 7,063,688.97 Indonesia found that lifestyle significantly influences the
Year 2017 12,375,468.72 intention to use e-wallet.
Year 2018 47,198,616.11
Year 2019 145,165,467.60
Year 2020 204,909,170.02 Another previous research examined the difference
between age, education, residence location and the
Source : Bank Indonesia, 2021
choice of payment [7]. The youngest (aged 15–24) and

Copyright © 2022 The Authors. Published by Atlantis Press SARL.

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 Advances in Social Science, Education and Humanities Research, volume 642
the oldest (aged 60 and above) have the lowest banking
adoption rates, indicating that cashless payments were
not natural from the start and that they still use cash.
Education is not the factor that contributes to the use of
cashless payment. People who live in the suburbs of
medium and big cities and work in big cities use cashless
more.
The present study is relatively new compared to the
previous studies. The present study seeks to examine the
effect of individual characteristics and behavior on the
probability of using cashless payment. The
characteristics of the individual under examination
include gender and income, while the behavior under
examination includes herding behavior in shopping, debt
behavior, and almsgiving behavior.
Shopping behavior, especially the copycat shopping
behavior, might boost the use of non-cash payment, thus
it is assumed that herding behavior in shopping has the
potential to increase non-cash payment. The notion ‘pain
of paying’ has it that a person experiencing certain
emotion when paying with money physically, they feel
sick psychologically [8].
Debt behavior is the individual behavior related to
debt level, debt to income ratio and debt management [9].
Uncontrolled debt behavior might lead to financial
distress experienced by an individual. This debt
behavior might get worse if an individual has a credit
card.
At present, there are Charitable Institutions opening
up accounts for charity collection purpose. Typically, the
donors will transfer their donation to the Institution.
Based on this notion, we proposed a hypothesis
maintaining that almsgiving behavior has the potential to
increase non-cash payment system.
The notion ‘pain of paying’ argues that a person
experiencing certain emotion when paying for money
physically, they feel sick psychologically [8]. With
cashless payment, the suffering is gone as someone does
not have to spend out money. Thus, it is assumed that
shopping behavior, debt and almsgiving with cashless
payment are correlated.
There are ten major big cities in Indonesia, including
Jakarta, Semarang, Surabaya, Medan, Bandung,
Makassar, Bandar Lampung, Palembang, Padang, dan
Batam. Five of these, including Medan, Palembang,
Bandar Lampung, Batam, and Padang, are located on
Sumatera. These five cities in Sumatra are categorized
as cities with an advanced economy and have high non-
cash transaction level.
The present study aims at discovering empirical
evidence of the impact of gender, income, herding
behavior in shopping, debt behavior, and almsgiving
behavior on cashless payments potentials in Sumatra,
Indonesia. The urgency of this research is that it creates
a new perspective on the factors which affect cashless
payment. The benefit of the present research is to help
create a policy for promoting a Non-Cash Movement
nationwide. In addition, for corporation, particularly its
marketing division, this study might shed some lights on
the strategy for selling goods online.
2. LITERATURE REVIEW
A cashless payment is one in which financial
transactions are made using digital currencies rather than
cash. In cashless payments, consumers conduct
transactions without using money, primarily through the
use of cards or electronic methods [4] and mobile
payment [7]. For example, credit cards, debit cards,
check, bilyet giro (transfer form), credit notes, debit
notes, e-money, internet banking, e-wallet, mobile
wallet, and other online transfers.
2.1 Financial behavior
Financial behavior is human actions related to their
financial settings [10]. [11]divided financial behavior
into 4 sub-factors, including savings, investment, as well
as cash and credit management. However, [10] and [11]
add another factor of retirement planning and insurance.
[14] found a financial management behavior
scale ranging from 1 to 5, starting from never, seldom,
sometimes, often, and always. It concerns with making a
comparison when making a purchase of a product or
service, paying bills on time, and making notes on
monthly expenses. Morever , the statement on staying
within budget or initial spending plan, maximize credit
card limits, paying credit, saving for long-term goals such
as education, owning a car and house, and having an
emergency savings fund was also put forth by [14].
Furthermore, the statement comprises depositing money
into a retirement account, buying bonds, stocks, or
mutual funds, and having adequate health, property, and
insurance policies.
The indicators of financial behavior include
comparing prices in different stores when it comes to
purchasing products or services, as well as paying bills
on time. Other indicators are recording monthly
expenses and staying within planned budget and paying
off overdraft balance every month. Furthermore, there
are indicators of exceeding the ATM card's maximum
withdrawal limit and paying more than the minimum loan
payment. Others include establishing or maintaining an
emergency savings fund, saving for long-term goals,
contributing to a retirement account, and purchasing
bonds, stocks, mutual funds, or long-term investments,
car insurance, and life insurance [15].
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2.2 Debt Behavior
Debt behavior is the financial knowledge or financial
literacy in managing money [16]. This knowledge is
needed so that individuals can manage their debts so that
financial well-being can be achieved [17]. According
to [9], one of the debt behaviors is shown by the feeling
of discomfort by borrowers with their debt. Furthermore,
people who are unhappy with their debt have lower debt-
to-income ratios.
2.3 Amlsgiving behavior
Almsgiving is a combination of two completely
different words from English : as spiritual love and as an
alms [16]. In Islam, Judaism, and Christianity, it is
emphasized that all wealth belongs to God and not to us.
In Islam, zakat and alms funds are collected by non-
profit institutions. These non-profit organizations then
donate these funds to provide food, scholarships, charity
caravans, income-generating projects and most
importantly to help the orphans [19].
3. METHOD
The sample consists of 500 people who came from the
five largest major cities in Sumatera, namely Medan,
Batam, Palembang, Padang, and Lampung. The
analytical tool used is logistic regression.
Binary regression model
y1t = a + b1x1it + b2x2it + ... + b5x5it + μ
(2)
Descended into logistics distribution function
Pit = 1 / [1+exp (a + b1x1it + b2x2it + ...b5x5it +)]
(3)
Pit = probability of non-cash payment with value between
0 and 1
Y = 1 for cashless payment greater than 50%, 0 other than
that
X1 = Gender
X2 = Income
X3 = Herding behavior in Shopping
X4= Debt behavior
X5 = Alms giving behavior
4. RESULTS AND DISCUSSION
4.1 Logistic Regression Test Results
Logistic Regression Test Results are in appendix
Model Coefficients Omnibus Test
The overall model fit which is measured using
omnibus test statistics employs a chi-square test. If the p-
value of the omnibus test statistic is less than the aplpha,
the null hypothesis is rejected. All models developed in
this study have a lower significance than the alpha (0.05),
indicating that they are consistent with the data.
Nagelkarke R2
The variability of independent variables explained by
dependent variables is explained by Nagelkarke R2. The
study produced R2 at 18.9 %. Despite small, this finding
provides answers to the research's questions.
Hosmer and Lemeshow Test
The Hosmer-Lemeshow goodness-of-fit statistic is used
to evaluate the model's fit for the purpose of comparing
the predicted and actual values of the dependent variable.
Figures which are greater than alpha indicate that the
model can be adopted for further analysis as the predicted
and the observed classifications have no significant
differences. The results of the test generate Hosmer and
Lemeshow value of 0.268, which is bigger than alpha
1%.
-2 Log Likelihood
The number -2LL (Deviance, DEV, or D) compares the
observed probability with the predicted probability. The
Log-Likelihood value from the model shows that they are
compatible with the data. The test results showed a
decline of 418,335 from the base model – greater than
critical values table of chi square.
Classification Tables
The classification table is used to measure the prediction
accuracy of multivariate logistic regression models. This
model, in this study, generated a relatively higher
classification capacity by 82.2%.
The test results indicated that income (X2) dan herding
behavior in shopping (X3) have the potential to boost
cashless payment significantly. Whereas, gender (X1),
debt behavior (X4), and almsgiving behavior (X5) have
the potential to boost cashless payment use
insignificantly. People with high income generally have
internet banking facilities and have large amount of needs
leading to the major use of cashless payment. People
with copycat behavior in shopping, especially online
shopping, are used to cashless payment as online
shopping typically requires cashless payment in its online
transaction.
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This finding is in line with [20] which suggests that there
is a negative arousal that arises when someone pays in
cash. When he makes a cashless payment this negative
arousal is reduced, and thus atrracts less attention to
decision risk. Therefore, cashless payments can increase
risky consumption behavior. Emotion was especially felt
that during physically paying money [8] was not felt by
spending time following it was done online.
The impact of debt behavior on cashless payment in this
study is found to be insignificant. It can be said that debt
behavior of the respondents in this study is within
reasonable limit as it does not significantly affect
cashless payment. This finding is congruent with [21]
who argue that risky debt practices may result from
improper use of credit cards that traps the consumers into
consumptive behaviors. It also supported by [22] which
revealed that consumers spend more time using credit
card by up to 100% [23].
Almsgiving behavior also does not have the significant
potential to boost cashless payment use. This means that
the charity transaction is not entirely made by cashless
payment. In fact, nowadays, the use of digital
transactions has been widely adopted by the zakat
management [24].
5. CONCLUSIONS
The results showed that at alpha five percent of
income and herding behavior in shopping had an effect
on the use of cashless payments. The implication is that
the use of cashless payments can potentially increase
through increasing community income so it can increase
economic growth and efficiency. However, herding
behavior should not be excessively done despite its
ability to boost the use of non-cash transactions.
AUTHORS’ CONTRIBUTIONS
Each author has an equal contribution in writing this
paper.
ACKNOWLEDGMENTS
The authors acknowledged that the present research
is funded by the Directorate of Research and Community
Service of the Ministry of Research and Technology /
Research and Technology / National Research and
Innovation Agency for the Fiscal Year of 2021 under the
Research and Community Service Funding Agreement
for the Fiscal Year 2021, with contract number
12/EI/KP.PTNBH/2021, March 8, 2021
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